1. There are two mobile phone firms operating in a market; FF (Firm 1) and Wodaphone (Firm2). The market demand is P = 75 - 0.5(Q1 + Q2). The total costs for the two firms are30Q1 and 30Q2.(a) If either FF or Wodaphone enjoyed a monopoly position in this market, what level ofoutput would they produce?(b) Using a diagram, fully labelled, describe how the equilibrium outputs for the two firmsare determined and solve mathematically for this solution.(c) The CEO of FF meets with her counterpart at Wodaphone and suggests that the twofirms each produce 22.5 units. The CEO of Wodaphone accepts this suggestion. Why didthe CEO of FF make this suggestion, and why did her counterpart at Wodaphone agree?Show this outcome on your diagram in (b).(d) After keeping to this agreement for 12 months, the CEO of Wodaphone notices that FF isactually producing more than 22.5 units. Why is FF doing this? Illustrate this on yourdiagram in (b). What action can Wodaphone take against FF?

In this question:- market demand=P=75-0.5Q1+Q2 Total cost of two firms:- firm 1=30Q1 firm 2=30Q2 so…

1. There are two mobile phone firms operating in a market; FF (Firm 1) and Wodaphone (Firm 2). The market demand is P = 75-0.5(Q1 + Q2). The total costs for the two firms are 30Q1 and 30Q2. (a) If either FF or Wodaphone enjoyed a monopoly position in this market, what level of output would they produce? (b) Using a diagram, fully labelled, describe how the equilibrium outputs for the two firms are determined and solve mathematically for this solution.

1. There are two mobile phone firms operating in a market; FF (Firm 1) and Wodaphone (Firm 2). The market demand is P = 75-0.5(Q1 + Q2). The total costs for the two firms are 30Q1 and 30Q2. (a) If either FF or Wodaphone enjoyed a monopoly position in this market, what level of output would they produce? (b) Using a diagram, fully labelled, describe how the equilibrium outputs for the two firms are determined and solve mathematically for this solution.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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